Required: You need to prepare a comprehensive 6-month budget in Excel, including supporting schedules and a report for the period January 1, 2016 to June 30, 2016 for Shady Lady, Inc (a fictional company). Assume it is the beginning of the year. This project must include:

Sales Forecast and Budget.......... Cash Receipts budget................ Purchase budget........................ Budgeted Inventory and Cost of Goods Sold Cash Purchases Disbursements budget..... Operating Expense budget...... Summary Cash budget............ Budgeted Income Statement..... Budgeted Balance Sheet............

Check figures are also located on page 4.

INFORMATION FOR SHADY LADY, INC. BUDGET PROJECT

1. Shady Lady, Inc. is a company that re-sells one product, an extraordinarily large and colorful sun shade umbrella. An overseas contractor makes the product exclusively for Shady Lady; so, Shady Lady has no manufacturing-related costs.

2. As of 11/15, each sun shade umbrella costs Shady Lady $4 per unit. Shady Lady currently sells each umbrella for $10 per unit.

The estimated sales (in units) are as follows:

Nov 2015

12,000

Dec 2015

10,850

Jan 2016

10,000

Feb 2016

11,400

Mar 2016

13,000

Apr 2016

16,200

May 2016

18,000

June 2016

22,000

July 2016

19,000

4. Per an existing contract, the cost of each umbrella is scheduled to increase by 7.5% on March 1, 2016. To offset this increase, the company plans to raise the sales price to $11.00 per unit beginning May 1, 2016. The sales forecast (i.e., estimated sales in units) takes this price increase into account.

5. Thirty percent of any months sales are for cash, and the remaining 70% are on credit. Thirty percent of the credit sales are collected in the month of sale, 50% are collected in the following month, and 16% are collected in the second month after the sale. The remaining receivables are deemed uncollectible. Bad debts are written off in the month the debt is deemed uncollectible (e.g. if the sale is made in January and is not collected by the end of March, it is written off in March.) No accrual for estimated bad debts is made in the month of sale.

6. The firms policy regarding inventory is to stock (i.e. have in ending inventory) 50% of the forecasted demand in units (i.e., estimated sales) for the next month. Heron uses the first-in, first-out (FIFO) method in accounting for inventories.

7. Forty percent of the inventory purchases are paid for in the month of purchase and the remaining 60% are paid in the following month (i.e. all of the previous months Accounts Payable are paid off by the end of any month.)

8. Equipment will be purchased in January requiring a cash payment of $50,000 due in January. Another payment of $40,000 is due in February. Also, dividends of $14,000 are to be paid in March.

9. Monthly operating expenses consist of the following (if these are cash expenses, they are paid when incurred):

Salaries and Wages= $4,000

Sales Commissions= 8% of sales revenue

Rent= $7,500

Other Variable Cash Expenses= 5% of sales revenue

Supplies Expense: See note= $2,000

Other: See note = $45,000

Note: Other general and administrative overhead is expected to be $45,000 per month. Of this amount, $25,000 represents depreciation and other non-cash expenses. The company maintains on hand one months worth of supplies.

10.The company must maintain a minimum cash balance of $15,000. Borrowing can make up shortfalls. For simplicity, assume that the bank will only lend (and accept repayments) in $1,000 increments. Ignore interest on the loan in your calculations, but minimize the amount borrowed and pay off any loans as soon as possible.

11. Cash on hand as of December 31, 2015 was $15,000. In addition, there were no notes payable as of this date.

12. See below the other Balance Sheet accounts with their balances as of December 31, 2015:

Cash....$ 15,000 Supplies.............................................. 2,000 Property, Plant and Equipment........... 970,000 Accumulated Depreciation................. 526,475 Common Stock................................... 200,000 Retained Earnings.............................. 325,470

13. Check Figures 2016:

Cash Receipts Budget

Total Cash Receipts, January: $102,415

Total Cash Receipts, Jan June: $849,099

Uncollectible/bad debt exp, January: $3,360

Shady Lady, Inc.
Sales Budget (Schedule 1)
For the 6 mos ending June '16
	Nov '15	Dec '15	Jan '16	Feb '16	Mar '16	Apr '16	May '16	June '16	6 mos total
Budged unit sales	12,000	10,850	10,000	11,400	13,000	16,200	18,000	22,000	90,600
Selling price per unit	$10.00	$10.00	$10.00	$10.00	$10.00	$10.00	$11.00	$11.00
Total Sales	$120,000	$108,500	$100,000	$114,000	$130,000	$162,000	$198,000	$242,000	$946,000
Cash Sales %	30%
Credit Sales %	70%
Cash Sales	$36,000	$32,550	$30,000	$34,200	$39,000	$48,600	$59,400	$72,600	$283,800
Credit Sales	25,200	64,785	72,415.00	71,092.00	78,400.00	92,288.00	112,840.00	138,264.00	$565,299
Total Sales	$61,200	$97,335	$102,415	$105,292	$117,400	$140,888	$172,240	$210,864	$849,099
Current month A/R Collections	30%					Hard coded numbers (can use formulas)
1 month prior A/R Collections	50%					Formulas
2 months prior A/R Collections	16%
Uncollectible	4%
Shady Lady, Inc.
Cash Receipts (Schedule 2)
For the 6 mos ending June '16
			Jan '16	Feb '16	Mar '16	Apr '16	May '16	June '16	6 mos total
Current month cash Sales			30,000	34,200	39,000	48,600	59,400	72,600	283,800
Current month A/R Collections			21,000	23,940	27,300	34,020	41,580	50,820	198,660
1 month prior A/R Collections			35,000	39,900	45,500	56,700	69,300	84,700	331,100
2 months prior A/R Collections			11,200	12,768	14,560	18,144	22,176	27,104	105,952
Total cash collections			$97,200	$110,808	$126,360	$157,464	$192,456	$235,224	919,512
Bad Debt Expense			2,800	3,192	3,640	4,536	5,544	6,776	26,488
Desired ending inventory %	50%
Shady Lady, Inc.
Purchase Budget (Schedule 3)
For the 6 mos ending June '16
	Nov '15	Dec '15	Jan '16	Feb '16	Mar '16	Apr '16	May '16	June '16	6 mos total
Budged unit sales	12,000	10,850	10,000	11,400	13,000	16,200	18,000	22,000	90,600
Add desired ending inventory	5,425	5,000	5,700	6,500	8,100	9,000	11,000	9,500	49,800
Total needs	17,425	15,850	15,700	17,900	21,100	25,200	29,000	31,500	140,400
Less Beginning Inventory		5,425	5,000	5,700	6,500	8,100	9,000	11,000	45,300
Required Purchases		10,425	10,700	12,200	14,600	17,100	20,000	20,500	95,100
Cost per unit		$4.00	$4.00	$4.00	$4.30	$4.30	$4.30	$4.30
Purchases		$41,700	$42,800	$48,800	$62,780	$73,530	$86,000	$88,150	402,060
Shady Lady, Inc.
Inventory and Cost of Goods Sold Calculation (using FIFO) (Schedule 4)
Purchase Budget (Schedule 3)
			Jan '16	Feb '16	Mar '16	Apr '16	May '16	June '16	6 mos total
Beginning Inventory- Units			5,000	5,700	6,500	8,100	9,000	11,000	45,300
Purchases- Units			10,700	12,200	14,600	17,100	20,000	20,500	95,100
Cost of Goods Sold- Units			10,000	11,400	13,000	16,200	18,000	22,000	90,600
Ending Inventory- Units			5,700	6,500	8,100	9,000	11,000	9,500	49,800
Beginning Inventory- $			20,000	22,800	27,950	34,830	38,700	47,300	191,580
Purchases- $			42,800	48,800	62,780	73,530	86,000	88,150	402,060
Cost of Goods Sold- $			40,000	45,600	55,900	69,660	77,400	94,600	$383,160
Ending Inventory- $			$22,800	$26,000	$34,830	$38,700	$47,300	$40,850	$210,480
% Paid in Month of Purchase	40%
% Paid in Month after Purchase	60%
Shady Lady, Inc.
Schedule of Budgeted Cash Disbursements for Merchandise Purchases (Schedule 5)
For the 6 mos ending June '16
			Jan '16	Feb '16	Mar '16	Apr '16	May '16	June '16	6 mos total
Cash purchases			$50,000	$40,000	$14,000
1 month prior A/P Collections
Cash disbursements for merchandise purch.
Fixed Operating expenses:		Variable Operating Expenses:
Salaries and Wages	$4,000	Sales Commissions, % of Revenue			8%
Rent	7,500	Other Variable Cash Expenses, % of Revenue			5%
Supplies Expense	2,000
Other - Overhead	20,000
Other - Depreciation	25,000
Shady Lady, Inc.
Operating Expense Budget (Schedule 6)
For the 6 mos ending June '16
	Jan '16	Feb '16	Mar '16	Apr '16	May '16	June '16	6 mos total
Salaries and Wages	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$24,000
Sales Commissions	8,193	8,423	9,392	11,271	13,779	16,869	$67,928
Rent	7,500	7,500	7,500	7,500	7,500	7,500	$45,000
Other Variable Cash Expenses	5,121	5,265	5,870	7,044	8,612	10,543	$42,455
Supplies Expense	2,000	2,000	2,000	2,000	2,000	2,000	$12,000
Other - Overhead	20,000	20,000	20,000	20,000	20,000	20,000	$120,000
Other - Depreciation	25,000	25,000	25,000	25,000	25,000	25,000	$150,000
Bad Debt Expense	2,800	3,192	3,640	4,536	5,544	6,776	$26,488
Total operating expenses	74,614	75,380	77,402	81,351	86,435	92,688	$487,871
Depreciation and noncash items	25,000	25,000	25,000	25,000	25,000	25,000	$150,000
Bad Debt Expense	2,800	3,192	3,640	4,536	5,544	6,776	$26,488
Cash disbursements for operating expenses	$46,814	$47,188	$48,762	$51,815	$55,891	$60,912	$311,383
Equipment payment - January	$50,000
Equipment payment - February	$40,000
Dividends - March	$14,000
Minimum Monthly Cash Budget	$15,000
Shady Lady, Inc.
Cash Budget (Schedule 7)
For the 6 mos ending June '16
	Jan '16	Feb '16	Mar '16	Apr '16	May '16	June '16	6 mos total
Cash balance, beginning
Add collections from customers
Total cash available
Less disbursements:
Cash disbursements for merchandise purch.
Cash disbursements for operating expenses
Equipment purchases
Dividends
Total cash disbursements
Excess of receipts over disbursements
Financing:
Borrowing-note
Repayments-note
Total financing
Cash balance, ending
Shady Lady, Inc.
Budgeted Income Statement (Schedule 8)
For the 6 mos ending June '16
Part 1:
	Jan '16	Feb '16	Mar '16	Apr '16	May '16	June '16	Total
Sales, net
Cost of goods sold (see Schedule 4) :
Gross margin
Total operating expenses
Net Income
Balance Sheet Accounts 12/31/15
Supplies
Property, Plant & Equipment
Accum. Depreciation
Common Scock
Retained Earnings
Shady Lady, Inc.
Budgeted Balance Sheet (Schedule 9)
6/30/15
Assets
Current Assets:
Cash (Schedule 7)
Accounts Receivable (Schedule 1)
Supplies
Merchandise Inventory (Schedule 4)
Plant and Equipment:
Buildings and Equipment (Sch 7 + 2015)
Accumulated Depreciation (Sch 6 + 2015)
Total assets
Liabilities and Equity
Accounts payable (Schedule 3)
Capital stock
Retained earnings (Sch 7&8 + 2015)
Total liabilities and equity

Uncollectible/bad debt exp, Jan June: $20,566

Purchase Budget

Total Purchases, Jan June: $402,060

Cash Budget

Total Cash Disbursements, Jan June: $802,170

Ending Cash Balance, June: $61,929

Budgeted Income Statement

Operating Expenses, Total: $494,546

Net Income, Total: $70,244

Budgeted Balance Sheet

Total Assets: $634,604